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Institute of Economic AffairsMon, 04 Feb 2019 15:01:18 +0000en-GBhourly1https://wordpress.org/?v=4.9.9https://iea.org.uk/wp-content/uploads/2016/08/cropped-bookmark-32x32.pngBlog – Institute of Economic Affairshttps://iea.org.uk
3232ieaorguk-blogfeedhttps://feedburner.google.comHaggis croquettes and the problem with compromisehttps://iea.org.uk/haggis-croquettes-and-the-problem-with-compromise/
https://iea.org.uk/haggis-croquettes-and-the-problem-with-compromise/#respondMon, 04 Feb 2019 13:03:49 +0000https://iea.org.uk/?p=29811Last week the City of London held their first attempt at a Burns night supper, with the First Minister and representatives of the Scottish Government as guests of honour. It is a difficult tradition to get wrong. Largely it requires steaming piles of Scotland’s revenge on the sausage, poetry that the English politely pretend to … Continue reading "Haggis croquettes and the problem with compromise"

]]>Last week the City of London held their first attempt at a Burns night supper, with the First Minister and representatives of the Scottish Government as guests of honour.

It is a difficult tradition to get wrong. Largely it requires steaming piles of Scotland’s revenge on the sausage, poetry that the English politely pretend to understand while feeling vaguely threatened, and bonhomie to overcome it, enabled through litres of distillate infused with the flavour of an entire peat bog.

Meanwhile in Shoreditch two Millenials have just set up the Haggis Croquette Cafe, serving Organic Iron-Bru made from recycled plastic girders. The haggis croquette is the most London-thing ever done in London.

I spent much of the evening talking to trade officials. Their job is to sell Scottish opportunity around the world and open up its markets.

This was interesting – how would descendants of Adam Smith visiting the birthplace of trade economist David Ricardo define their comparative advantage? What can Scotland do better than anyone else? What might they do well enough that they can carve out positions, despite larger rivals, better off leaving such things to Scotland? Fundamentally, how are they going to compete?

There was an uneasy pause after these questions. And then to paraphrase, “Oh no, we don’t want to compete, we want to cooperate! With everyone! Not being threatening, that’s our advantage!”

I feel very sure that Smith, on hearing this, would have reached out, to extend the invisible hand of history across time, to give this official a mild slap. “Encouraging competition, with and from other places, and then getting out of the way, is the whole point”, he might say.

Free trade underpinned by competition reduces prices for consumers. It encourages firms to invest in better ways of doing things, or shift to doing new things. In doing so it raises productivity, prosperity and progress in all markets.

Cooperation conversely speaks more to defending vested interests. You give our oatcakes geographic indicator protections, we’ll pretend your mooncakes can only be made on the moon. Rather than put the consumer at the heart of trade deals, it speaks to producers – the rules and bureaucracies that surround them and raise barriers to entry, often on specious grounds, or as straightforward protectionism. It encourages politicians and their officials to seek unpalatable compromises in trade deals rather than to confront difficult choices.

Back to the haggis croquette.

Rather than the representing an exchange between the oozing splendour of the Scottish haggis and the crunchy warm satisfaction of a French potato snack, it’s a sad soggy mess of both. It’s a prime symbol of our Brexit negotiation process – the promotion of terrible compromises when none are required. Only perhaps the architects might have also insisted it were run through with a soft layer of Irish soda bread, just in case there was a risk of anyone wanting to eat it. A compromise is not always better than making a choice.

Scotland additionally, in or out of the UK, does not need to mince around the world’s markets like a wee timorous beastie, hoping for cheese. It has an export and investment story to tell, and can tell it proudly. Push these officials for long enough and they’ll apologetically admit Edinburgh is a bit like London, only 40% cheaper, and brilliant at insurance and cybersecuity, alongside the whisky and culture.

In doing that less whimsically they help raise the ambition of the whole UK, and encourage other regions to compete. They might even convince the British Government to focus more on what investment climate it wants here, rather than on the compromising process games of officialdom. It’s what Smith and Burns would have wanted.

Andy Mayer is Chief Operating Officer at the IEA. Andy worked as Head of Public Affairs, UK & Ireland at BASF plc for seven years. He has over 20 years of experience in strategic communications and the operations that support them in the business and think tank worlds.

]]>https://iea.org.uk/haggis-croquettes-and-the-problem-with-compromise/feed/0Britain does not have an ‘underemployment’ problemhttps://iea.org.uk/britain-does-not-have-an-underemployment-problem/
https://iea.org.uk/britain-does-not-have-an-underemployment-problem/#respondFri, 01 Feb 2019 11:28:36 +0000https://iea.org.uk/?p=29801When I was growing up, unemployment was the great economic concern of our time. If I’d been born a little earlier, it would have been inflation, but in the 1980s the glowing orange signs of the old Jobcentres were a ubiquitous feature of the television news. And with good reason. In 1984, the unemployment rate … Continue reading "Britain does not have an ‘underemployment’ problem"

]]>When I was growing up, unemployment was the great economic concern of our time. If I’d been born a little earlier, it would have been inflation, but in the 1980s the glowing orange signs of the old Jobcentres were a ubiquitous feature of the television news.

And with good reason. In 1984, the unemployment rate reached almost 12 per cent. When I was studying for my economics A-level in the early 1990s, it was still above 10 percent. The persistence of this great evil gave my teacher’s Keynesianism a certain appeal to my teenage self, but it would not be long before unemployment began to fade as an issue. Within a couple of years, it was falling steadily and for most of the Blair era it hovered at around five per cent. The Great Recession caused it to jump to eight per cent for several years before falling sharply again after 2012.

Towards the end of 2018, the rate of unemployment dropped to just four per cent, lower than at any time since the spring of 1974. With 32.53 million people in work, the employment rate is 75.8 per cent, the highest since records began in 1971.

This seems like cause for celebration, but there are some who say that Britain’s employment miracle is more of a mirage, with full-time jobs being replaced by insecure zero-hours contracts, and unemployment being replaced by ‘chronic underemployment’. The tweet below, which has received thousands of retweets, typifies the view that the unemployment rate only appears to be low because of a definitional technicality. The unspoken message is obvious: these aren’t real jobs.

BBC Reality Check asked the Office for National Statistics (ONS) whether working just one hour a week was all that was needed to be officially classified as employed?

The ONS’s Labour Force Survey (LFS) does indeed count someone as employed if they have ‘done at least one hour of paid work in the week before they were interviewed’. It has always done so and you don’t need to get in touch with the ONS to discover this. It is there in black and white on the ONS website where you can also find information about the number of people on zero-hour contracts and how they feel about them.

The Labour Force Survey shows that there has been a large rise in the number of people who say that they are on zero-hours contracts. From 252,000 in 2011, the figure had risen to 903,000 by 2016. Curiously, most of this increase took place in a single year (between 2012 and 2013) and the ONS notes that the sharp upward trend is ‘likely to have been affected by greater awareness and recognition of the term “zero-hours contract”’.

This is an important point. ‘Zero-hours contract’ is a relatively new term for what used to be called casual labour. It was almost never used by the media before 2012. And so, although the number of people who said they were in these contracts more than doubled between 2012 and 2013, the ONS concludes that this ‘appeared to be due mainly to increased recognition and awareness of “zero-hours contracts”’. The fact that the trend flattens out after 2016 suggests that the term has now become universally understood.

There is a chicken and egg problem here. It is not clear whether the publicity surrounding zero-hours contracts has caused more people to identify as being on them or whether the rapid rise in the number of people on zero-hours contracts generated the publicity. It may be a bit of both.

There is another source of statistics that could help but it also has a flaw. The ONS’s Business Survey asks companies whether they employ people on ‘contracts with no guaranteed minimum number of hours’. By this measure, there were between 1.6 million and 2.0 million zero-hours contracts in late 2017, equating to six per cent of all employment contracts.

Business surveys arrive at a larger number for two reasons. Firstly, employers are more likely than employees to understand the technicalities of their contracts. Secondly, while the LFS counts people, the employer survey counts contracts, and since some workers have multiple contracts, it does not tell us how many people are on ‘contracts with no guaranteed minimum number of hours’. Unfortunately, some newspapersseem not torealise this.

There is simply inadequate evidence to conclude that there has been a big rise in the number of people on zero-hours contracts in the last decade. Nevertheless, 901,000 people – 2.8 per cent of the total workforce – say that they are on them and there is little reason to disbelieve them. Should we be concerned? Are they, as some have suggested, ‘chronically underemployed’ and should we view them are being virtually unemployed?

Only a quarter of people on zero-hours contracts say that they would like more hours and this number has been falling. In 2014, it was more than a third. A quarter is a significant minority, but it is not unusual for workers who do not work full-time to want more hours. Many of them have only recently entered or re-entered the labour market. In the UK, 15 per cent of part-time workers would prefer to be working full-time (down from 20 per cent in 2013 and well below the EU average of 26 per cent). The ONS notes that zero-hour contract workers are more likely to want more hours than the average employee but acknowledges that this ‘could be linked to a higher proportion of “zero-hours contract” jobs being part-time’.

My colleague Len Shackleton has discussed zero-hours contracts before so I will not go through the pros and cons again here. The aim of this blog post is not to reopen the debate about whether these contracts should be banned (as the TUC wants) but to debunk the notion that Britain’s unusually low level of unemployment is a chimera and that the true level is being masked by chronically underemployed people being wrongly classified as being in work. The reality is that the average person on a zero-hours contract works longer hours than a part-time employee and although some would like more hours, a growing majority do not.

In any case, the number of people involved is not big enough to make a significant impact on the employment statistics. Even if we made the ludicrous assumption that every zero-hours contract worker who wants more hours is barely working at all and should be reclassified as unemployed, it would only take the employment figures back to where they were last September. Employment would still be at a record high and unemployment would still be at its lowest level since 1975.

Christopher Snowdon is the Head of Lifestyle Economics at the IEA. He is the author of The Art of Suppression, The Spirit Level Delusion and Velvet Glove; Iron Fist. His work focuses on pleasure, prohibition and dodgy statistics. He has authored a number of publications including Sock Puppets, Euro Puppets, The Proof of the Pudding, The Crack Cocaine of Gambling and Free Market Solutions in Health.

]]>https://iea.org.uk/britain-does-not-have-an-underemployment-problem/feed/0The road to increased carbon emissions is paved with good intentionshttps://iea.org.uk/the-road-to-increased-carbon-emissions-is-paved-with-good-intentions/
https://iea.org.uk/the-road-to-increased-carbon-emissions-is-paved-with-good-intentions/#respondMon, 28 Jan 2019 10:40:43 +0000https://iea.org.uk/?p=29784Christian antipathy towards Donald Trump in the hierarchy of the established church is easy to comprehend, although, given Democratic policies on certain issues in the moral-cultural sphere, the Archbishop of Canterbury’s remark that he cannot understand Christian support for Trump is a bit bemusing. The issues most Christians (including Pope Francis) tend to focus on … Continue reading "The road to increased carbon emissions is paved with good intentions"

]]>Christian antipathy towards Donald Trump in the hierarchy of the established church is easy to comprehend, although, given Democratic policies on certain issues in the moral-cultural sphere, the Archbishop of Canterbury’s remark that he cannot understand Christian support for Trump is a bit bemusing. The issues most Christians (including Pope Francis) tend to focus on when criticising Trump are the proposed “Wall” to keep out migrants and his opposition to joining international regulatory initiatives in relation to climate change (which critics compare unfavourably with the EU’s support).

With regard to the latter issue, this attitude is indicative of a worrying trend in institutionalised Christianity. The phrase “actions speak louder than words” seems to have been replaced by “regulation speaks louder than actions”.

Recent figures suggest that reductions in carbon emissions in the US have been greater than in any other developed country by quite a margin. Interestingly, the EU has increased its emissions hugely. Indeed, the increase in emissions in the EU more than cancels out the reduction in the US.

All the good work done by the US has been undone by the EU. It seems that signing treaties matters more to many Christians than actually doing something about carbon emissions.

This is not to say that Trump is taking the US to where it should be. In my view, there is a strong case for a carbon tax in the US that is applied uniformly to all carbon emissions and/or an emissions trading system.

The experience of the US does, though, demonstrate one point very effectively. Markets may not give rise to perfect solutions to economic problems. However, we cannot assume that regulation will correct the failings of markets. One imperfect group of people (regulators, bureaucrats and politicians) cannot be assumed to be able to perfect the results of other imperfect institutions (markets with people buying, selling and creating products governed by the rule of law). We are all carved out of the same stone.

Carbon emissions have fallen in the US because of the move from coal to fracked gas which has been market-driven. The EU, on the other hand, has labyrinthine and complex networks of regulation when it comes to energy policy which is lauded by climate change activists but much of which pulls in opposite directions. In 2017, the German government spent €2.7 billion subsidising coal production whilst ostensibly regulating markets in order to reduce carbon emissions. The total value of energy subsidies in the EU (estimated by the EU itself) is €113 billion excluding transport subsidies. This leads directly to increased emissions. And, as we see, the effect of the government interventions is the precise opposite of the declared intention.

We should not judge the results of government intervention by the intentions of those who wish to improve the world through such action. In a quotation often attributed to Otto Von Bismarck, the poet John Godfrey Saxe once said: ‘the man who wishes to keep his respect for sausages and laws should not see how either is made’. A bit more realism is called for. Government regulation arises as a result of a very human process. It is not always motivated by good intentions, but, even when it is, the results reflect the flawed nature of humanity. The EU failure to reduce carbon emissions illustrates this point very well.

Prof Philip Booth

Philip Booth is professor of finance, public policy and ethics at St Mary’s University, Twickenham and Senior Academic Fellow at the Institute of Economic Affairs.
Philip was formerly the IEA's Academic and Research Director between 2002-2016.

]]>https://iea.org.uk/the-road-to-increased-carbon-emissions-is-paved-with-good-intentions/feed/0The unintended consequences of ethnic pay gap reportinghttps://iea.org.uk/the-unintended-consequences-of-ethnic-pay-gap-reporting/
https://iea.org.uk/the-unintended-consequences-of-ethnic-pay-gap-reporting/#respondFri, 25 Jan 2019 11:56:58 +0000https://iea.org.uk/?p=29780The Government’s consultation on ethnic pay gap monitoring closed a couple of weeks ago. We await the findings, but it looks pretty certain, given the submissions I have seen, that we will soon see compulsory reporting. Many of these submissions by businesses and representative bodies support the proposal by Baroness McGregor-Smith, in her 2017 review of … Continue reading "The unintended consequences of ethnic pay gap reporting"

]]>The Government’s consultation on ethnic pay gap monitoring closed a couple of weeks ago. We await the findings, but it looks pretty certain, given the submissions I have seen, that we will soon see compulsory reporting.

Many of these submissions by businesses and representative bodies support the proposal by Baroness McGregor-Smith, in her 2017 review of Race in the Workplace (an odd title, incidentally, given that the issue is ethnicity, not the widely-discredited concept of race), that all organisations with over 50 employees should be obliged to publish their ethnic pay gap and have a policy in place to show how they are promoting inclusion and equality. Before a company could be considered for a slice of the £100 billion or so of public procurement, its policy and progress towards narrowing the pay gap would have to be approved.

As I have argued before, I think that reporting on pay gaps needs a much more sensitive approach than publishing raw numbers. Pay differentials reflect a host of factors such as experience, qualifications, hours worked, seniority, responsibility and so on. In order to home in on sources of disadvantage (not the same thing as discrimination, incidentally) we need much more information about individuals and their background, of the kind we can get from national datasets such as the Labour Force Survey rather than payroll data from firms.

The problem is that raw differentials at the level of small organisations (which in most cases will only have a handful of ethnic minority employees) conceal more than they reveal. They are all too easily misinterpreted to fit a political narrative of ‘naming and shaming’. This in turn may lead firms to attempt to manipulate the published figures to cast themselves in a better light. In some cases, such manipulations may damage employees – for example when firms outsource poorly-paid work in which ethnic minorities are over-represented.

Some of the problems of ethnic pay reporting are brought home by a recently-published audit of a very large ‘firm’ – the Metropolitan Police.

The audit apparently shows an average difference in pay between White and BAME officers of £1.80 per hour, and for all employees (officers and staff) a mean pay gap of 9.7%. The Met has received a lot of negative publicity as a consequence, particularly as this gap seems to have marginally widened since the last time it was calculated. But does this tell us anything useful at all?

For a start, the categories. ‘BAME’ means ‘Black, Asian and minority ethnic’. But this is easily – and misleadingly – elided to ‘Black’. The Guardian did this in its first report, headlined ‘Black police paid less…’, and was forced to issue a retraction. This focuses on a sub-set of the grouping which is not representative of the category as a whole.

Even when spelt out, the category is so broad as to be meaningless. There are probably approaching 100 distinct minority ethnicities in London. Their experience is very different. Some groups, notably those of Chinese or Indian (Hindu) heritage, are known to do as well as, if not better than, White British. Others – Bangladeshi, Pakistani, Somali – do far worse. There is an important distinction, too, between first generation immigrants and second (and subsequent) generations; the latter fare much better, because of better education and language skills. Then of course there is the distinction between men and women, neglected in this analysis. Black Caribbean women do better in the labour market than White British women on some measures.

Nor is the ‘White’ category as homogenous as it may seem. The Met’s figures lump together disparate groups on the basis simply of skin colour. It is known that those in the ONS category ‘Gypsy or Irish Traveller’ (how has this description survived PC scrutiny?) and Poles and other Eastern Europeans do not do as well as some other ‘White’ groups. There are also big regional differences in average pay. There are substantial numbers of ‘poor whites’ in this country, neglected in the simplistic comparisons favoured by our would-be social engineers.

Another problem with using these crude indicators when dealing with such complexity is that changes over time may produce misleading information. In the Met’s case, they stress that police pay is rigorously determined by roles, and those in the same posts with the same experience, working the same hours and so on will be paid the same. But the overall pay gap has slightly worsened because of their recruitment efforts. The Met has made commendable efforts in trying to recruit a larger proportion of BAME officers and staff. But of course the bulk of new entrants, whatever their ethnicity, start at the bottom of the pay hierarchy, and thus an increased proportion of BAME entrants increases the pay gap.

The Met is used to criticism. But subjecting smallish businesses to the same scrutiny will produce pay gap results which then may generate perverse behaviour such as reducing job openings for lower-skilled workers to improve the indicator.

As I say, we are likely to face compulsory ethnic monitoring of our businesses (some would like this to go down as far as those with as few as ten employees). This may cause some improvements in company recruitment and treatment of staff, but it is unlikely to make fundamental changes in measured pay inequality, which is often rooted in factors beyond the powers of businesses, or government, to eliminate – even if this were desirable.

The danger is that by focusing on some groups rather than others, simplistic policies may exacerbate rather than reduce inequality. It may also, sadly, tend to heighten animosity between these different groups and contribute to the ever-growing disparagement of private enterprise and the wider institutions of a free society.

Len Shackleton is an Editorial and Research Fellow at the IEA and Professor of Economics at the University of Buckingham. He was previously Dean of the Royal Docks Business School at the University of East London and prior to that was Dean of the Westminster Business School. He has also taught at Queen Mary, University of London and worked as an economist in the Civil Service. His research interests are primarily in the economics of labour markets. He has worked with many think tanks, most closely with the Institute of Economic Affairs, where he is an Economics Fellow. He edits the journal Economic Affairs, which is co-published by the IEA and the University of Buckingham.

]]>https://iea.org.uk/the-unintended-consequences-of-ethnic-pay-gap-reporting/feed/0Is highlighting the failures of socialist Venezuela nothing more than political point-scoring?https://iea.org.uk/is-highlighting-the-failures-of-socialist-venezuela-nothing-more-than-political-point-scoring/
https://iea.org.uk/is-highlighting-the-failures-of-socialist-venezuela-nothing-more-than-political-point-scoring/#respondFri, 25 Jan 2019 11:36:38 +0000https://iea.org.uk/?p=29779Is highlighting the failures of socialist Venezuela nothing more than political point-scoring? That seems to be the new accusation levelled at those who want pro-Venezuela advocates to retract their previous praise, now that country that has spiralled into violence and mayhem under the reign of dictator Nicolás Maduro. No doubt, in our politically polarized climate, … Continue reading "Is highlighting the failures of socialist Venezuela nothing more than political point-scoring?"

Is highlighting the failures of socialist Venezuela nothing more than political point-scoring? That seems to be the new accusation levelled at those who want pro-Venezuela advocates to retract their previous praise, now that country that has spiralled into violence and mayhem under the reign of dictator Nicolás Maduro.

No doubt, in our politically polarized climate, we’re all looking for ‘gotcha’ moments – that one miraculous statistic or example that blows our political opponents out of the water.

For years, that example for the British left was Venezuela. After Mao’s China and Castro’s Cuba both proved painful disappointments, Venezuela became the new posterchild for socialism; the ammo to fire against savage, capitalist countries in Europe that had the audacity to continue to recognize private property rights and the benefits of market forces.

But not even the most oil-rich country in the world was able to prop up the pillars of socialism, which requires similar levels of state power and control as seen in famously fascist countries throughout the twentieth century. Venezuelans are not just suffering from a collapsed economy, with inflation rates at a staggering *947 per cent; they are suffering from the most basic infringements on human rights, including the overthrow of democratic processes – severely weakened by Hugo Chavez and utterly demolished by his successor Maduro.

After an uncomfortably long silence from Labour Leader and Venezuela cheerleader Jeremy Corbyn, we finally heard his take on the unfolding horrors, which stopped (very far) short of criticising the regime. When asked if he condemned Maduro’s actions (presumably including the round-up and arrest of his political opponents), Corbyn took the opportunity to condemn ‘all violence’, making no comment about Maduro specifically, and swiftly moved on to remind us that Venezuelan leaders have made “effective and serious attempts at reducing poverty…improving literacy, and improving the lives of many of the poorest people.”

‘Serious attempts’ to implement socialist policies may be of top priority to Corbyn, but for the vast majority of us who care about outcomes, it’s important to note that the poverty rate in Venezuela is up from 48% to 82%, and infant mortality rates have increased by 100 fold.

Does mentioning these facts equate to political point-scoring? You could argue it doesn’t make a difference why you’re flagging up the facts: whether you care deeply about the human rights infringements taking place on the other side of the world, or you don’t like the politics of another party, facts are still facts. But considering the evidence, I don’t see how it can be deemed point-scoring, when up until mere moments ago, it was prominent elected officials and figures on the left who were placing Venezuela in the spotlight.

“What’s so exciting about visiting Venezuela is I can see how a better world is being created”, said Noam Chomsky in 2009. As it turns out, the renowned philosopher was wrong; as were Jeremy Corbyn, Shadow Health Secretary Diane Abbott, and Senator Bernie Sanders, who tried to paint ‘bread lines’ as an indicator of a good society.

Denouncing socialism does not mean giving up a left-wing agenda. But it does mean scaling back dewy-eyed fantasies of full state control, and moving to a moderate stance of advocating for social democracy; a system that offers higher levels of redistribution, while embracing market competition in areas ranging from healthcare to school choice.

It’s time for the likes of Corbyn and **Sanders to admit their errors, and, most importantly, change their tune on the kinds of policies they’d like to implement in the UK and USA.

Until then, countering claims about a Venezuelan socialist paradise shouldn’t be deemed as ‘playing politics’; as hundreds die under a power-hungry dictator, and millions more suffer from poverty and starvation, countering such claims is just the decent thing to do.

Kate is Associate Director of the IEA. Kate oversees the IEA’s Media Centre and digital platforms, creating and commissioning content for the website, social media, and ieaTV. Kate regularly features across the national media, including appearances on BBC News, Sky News, Channel 4, Channel 5, ITV and BBC’s Question Time.

]]>https://iea.org.uk/is-highlighting-the-failures-of-socialist-venezuela-nothing-more-than-political-point-scoring/feed/0The Dyson outrage is a load of hot airhttps://iea.org.uk/the-dyson-outrage-is-a-load-of-hot-air/
https://iea.org.uk/the-dyson-outrage-is-a-load-of-hot-air/#respondThu, 24 Jan 2019 12:40:02 +0000https://iea.org.uk/?p=29774James Dyson’s decision to relocate the headquarters of his company to Singapore has sparked a hyperbolic and predictable outcry. Dyson, an entrepreneur and prominent supporter of Brexit, has run into accusations of hypocrisy and even treachery from MPs on both sides of the green benches. Elsewhere, prominent commentators on the Leave and Remain sides of … Continue reading "The Dyson outrage is a load of hot air"

]]>James Dyson’s decision to relocate the headquarters of his company to Singapore has sparked a hyperbolic and predictable outcry.

Dyson, an entrepreneur and prominent supporter of Brexit, has run into accusations of hypocrisy and even treachery from MPs on both sides of the green benches. Elsewhere, prominent commentators on the Leave and Remain sides of the Brexit divide have called for his knighthood to be revoked.

In what he claims was a joke, journalist Owen Jones tweeted of Dyson a few days ago – “nice company. Be a shame if someone were to nationalise it.” – a gag that might have landed a bit better were it not for the years Jones spent praising Venezuela’s economically ruinous nationalisation programme.

Given Dyson’s prominence in the referendum campaign, the timing and optics of the decision certainly aren’t ideal for Leavers. At the same time, much of the reaction has been ill-informed and potentially damaging.

As the BBC reports, the appliance maker’s move means that two executives will relocate – although work at Dyson’s base in Wiltshire won’t otherwise be affected, current levels of Research and Development investment will be maintained, and no jobs will be lost. A Dyson spokesman said the company does not intend to move its current UK patents to Singapore, which would mean that corporation tax receipts will largely remain in Britain.

Some have branded the decision an attempt at tax minimisation, yet this also doesn’t stand up to scrutiny. Yes, the move means Dyson could, in future, pay marginally less in corporation tax, with Singapore’s rate sitting at 17% compared to Britain’s 18% (starting next year), but these are modest sums when you consider the broader potential gains.

Last year, more than 90% of Dyson’s sales occurred outside the UK, with 70% of the company’s overall growth concentrated in Asia. The broader global focus of manufacturing has been shifting towards Asia for many years; Dyson has already chosen to base its Electric Car plant in Singapore, largely for proximity to the Chinese market where more than a million of the vehicles were sold last year (more than the combined totals for the USA and Europe). Singapore’s FTA with the EU may be a helpful bonus, but it pales into comparison with the benefits of the wide-reaching agreement Singapore enjoys with China.

In addition, Singapore is a member of the Association of Southeast Asian Nations (ASEAN), a 10-country strong regional grouping which has successfully removed many barriers to capital and worker movement between the member countries. Perhaps the outrage might be justified had Dyson relocated the two executives to Paris or Frankfurt, but in context, the move just looks like sensible business, and a desire to service the world’s faster growing markets. Given the service-based nature of the UK economy compared to Europe, where manufacture is a much bigger priority, the Dyson story arguably looks more worrying for the latter.

Of course, James Dyson’s history with the European Union hasn’t exactly been harmonious. EU cronyism has long punished and stifled Dyson inventions. Until last year, energy levels standards for vacuum cleaners were rigged in favour of traditional bagged devices, since EU rules – unbelievably – stipulated testing in dust-free conditions. Though he eventually overthrew this case in the ECJ after years of hassle and huge expense, Dyson might well wish to avoid similar potential inconveniences. The EU’s current direction of travel towards further regulation and taxation of new innovations, including AI and robotics, does not suggest it will create a pro-competitive environment in the future. These concerns are hardly academic either, given that the current shape of the withdrawal agreement would see Britain aligning heavily with the EU’s regulatory system.

Even putting the rationale for the Singapore move aside, cries of ‘Traitor!’ from leading politicians should concern us all. Over the years, Dyson has created thousands of jobs and contributed millions to the Treasury coffers. The company recently announced an additional £1.5 bn of UK investment, creating 3,000 jobs and tripling its domestic workforce. It is disappointing to hear supposedly pro-business politicians vilifying wealth creators and drivers of innovation. Dyson was knighted for his contributions to engineering – not because he somehow pledged never to expand his company’s overseas operations in the future.

To many of us, Britain’s decision to leave the EU represents an opportunity to forge an outward-looking, global Britain. This should not involve nativist accusations of ‘treachery’ when business people make strategic decisions in keeping with the world economy.

Instead of demonising entrepreneurs, our politicians should consider how to foster a tax and investment regime that entices employers, and a light-touch regulatory approach to encourage competition and innovation. Ideally, we would follow our own Singapore-style policies, reducing taxation and legislation, which have transformed the fortunes of that country. Either way, Dyson’s move to the Far East serves as a warning that obsessing over an economically stagnant EU may be a dead-end.

Madeline is the IEA’s Editorial Manager, responsible for commissioning and running the IEA blog, and creating content for the IEA podcast channel and other media outlets. Prior to joining the Institute, she worked as a Parliamentary researcher and speechwriter, and as a reporter for Newsweek Magazine.
Madeline graduated from St Hilda’s College, Oxford in 2014, with a degree in English. As an undergraduate, Madeline was actively involved in university politics, and was elected to Standing Committee of the Oxford Union during her studies.

]]>https://iea.org.uk/the-dyson-outrage-is-a-load-of-hot-air/feed/0Don’t trifle with our freedom – the case against the “Pudding Tax”https://iea.org.uk/dont-trifle-with-our-freedom-the-case-against-the-pudding-tax/
https://iea.org.uk/dont-trifle-with-our-freedom-the-case-against-the-pudding-tax/#commentsWed, 23 Jan 2019 10:41:02 +0000https://iea.org.uk/?p=29771Dr Allison Tedstone, Public Health England’s “Head of Diet and Obesity”, has recently proposed a new ‘Pudding Tax’ which would cover cakes, biscuits, sweets and other sugary snacks The justification for this new tax hinges, firstly, on the idea that obesity is a public health crisis. In fact, PHE has described obesity as an “epidemic”. … Continue reading "Don’t trifle with our freedom – the case against the “Pudding Tax”"

]]>Dr Allison Tedstone, Public Health England’s “Head of Diet and Obesity”, has recently proposed a new ‘Pudding Tax’ which would cover cakes, biscuits, sweets and other sugary snacks

The justification for this new tax hinges, firstly, on the idea that obesity is a public health crisis. In fact, PHE has described obesity as an “epidemic”. It also assumes that the Government should use any means at its disposal, including the tax system, to overcome this problem.

The first of these ideas contains an implicit assumption, which in itself poses an interesting philosophical question. This is the notion that there is one objectively ‘good’ lifestyle and body shape to which all people should drive towards. For your average man, this means weighing 10.5 stone, with the average woman clocking in at 8.5 stone. From this, the NHS recommends men consume 2,500 calories per day and women 2,000 calories.

Most people take little to no notice of these recommendations. Instead, they implicitly weigh up the subjective psychological, social and monetary costs and typically reach the conclusion that such limits are far too restrictive. Currently, around a quarter of Britons are obese, but if you add in those who are overweight this figure rises to 60 per cent. Yet instead of accepting the fact that most people reject their advice, PHE has decided to use more force than ever to perpetuate their Platonic ideal of the “perfect man”.

The Sugar Tax is another embodiment of this paternalistic ideology. It uses tax (and the threat of legalised force) to manipulate the choices of consumers to the supposedly objective ends set by PHE. In most cases this end is longevity, something we reject every day of the week and knowingly too, as Christopher Snowdon sets out in his book, Killjoys. Very few people share PHE’s lofty ideals. For most of us, drinking a Coca Cola or eating a plate of chips – even if it means potentially shaving a few minutes off our lifespan – is worth the trade off.

Once we accept paternalism, it becomes far harder to reject other authoritarian policies when they emerge. For if tax can be used in principle, as the Sugar Tax has shown us, then why not extend this principle to cover all “bad” goods? This is exactly what Dr Tedstone has done, merely extending the logic of the Sugar Tax one step further with the “Pudding Tax”. And if each tax increase is designed to reduce consumption of “bad” goods further still, and if health and longevity is PHE’s only goal, then the movement of taxation can only go in one direction.

Already, PHE has called for more central planning to tackle these issues, including zoning bans on fast food outlets. Even more shockingly, they have proposed outright calorie caps on food which, as Chris Snowdon notes, would constitute “the biggest interference in the food supply by any country in peacetime”. According to PHE consultation documents, an onion bhaji could face a cap of 134, well below the content of an average product. Equally restrictive caps have been proposed for pizzas, salads and restaurant meals. In practice, such measures would amount to outright bans on certain foods as we know them, either through recipe reformulation or ‘shrinkflation’.

Supporters of the pudding tax might talk about offsetting the cost of obesity to the NHS. Yet the evidence here is relatively inconclusive. Estimates of the net cost range from the NHS’s estimate of £6.1bn to the IEA’s £2.47bn figure. Some studies have even suggested that obesity saves the taxpayer money due to the premature death of obese individuals. This evidence throws up serious questions about attempts at a Pigouvian tax – even if “Sin Taxes” like these had a solid track record of altering behaviour and reducing obesity, which they do not.

Let us accept that there is a cost – albeit probably smaller than official estimates. Would it justify a ‘Pudding Tax’? Either way, the policy sets a dangerous precedent in assuming that the existence of socialised healthcare represents a valid reason for eroding individual liberty. Following the logic behind the “Pudding Tax” to its full conclusion would result in no choice, no virtue, no freedom and no personal responsibility. The public health movement’s current direction of travel is clear – first, tax “bad” food, then regulate it, then ban it outright. We should consider this slippery slope when evaluating policies like the “Pudding Tax”.

A truly liberal society should prize consumer choice as highly as other key freedoms. Only with the freedom to choose can individuals pursue their own ends. To some, this may be trying to live healthy and long lives, for others, it will mean sacrificing greater longevity for more indulgent dining.

As the reach of the State grows, the public faces a stark choice between paternalism and freedom. Let’s hope they choose the latter.

Charlie Amos

Charlie is currently interning at the IEA and is also the TaxPayers' Alliance Local Coordinator for Sussex. During his gap year he is attempting to further the free market message and highlight the dangers of paternalism and government overreach.

]]>https://iea.org.uk/dont-trifle-with-our-freedom-the-case-against-the-pudding-tax/feed/1It is perfectly possible to liberalise our immigration system without antagonising the publichttps://iea.org.uk/it-is-perfectly-possible-to-liberalise-our-immigration-system-without-antagonising-the-public/
https://iea.org.uk/it-is-perfectly-possible-to-liberalise-our-immigration-system-without-antagonising-the-public/#commentsMon, 21 Jan 2019 10:54:00 +0000https://iea.org.uk/?p=29756Around the time the US Congress debated the Patient Protection and Affordable Care Act (“Obamacare”), opinion surveys on the subject showed an intriguing divide. When voters were asked about individual components of Obamacare, it turned out that a lot of components enjoyed widespread support, and that there was quite a lot of agreement between Democrats, … Continue reading "It is perfectly possible to liberalise our immigration system without antagonising the public"

Around the time the US Congress debated the Patient Protection and Affordable Care Act (“Obamacare”), opinion surveys on the subject showed an intriguing divide. When voters were asked about individual components of Obamacare, it turned out that a lot of components enjoyed widespread support, and that there was quite a lot of agreement between Democrats, Republicans and Independents. However, as soon as the word “Obamacare” was mentioned, the issue suddenly became hyper-partisan, and divisive. Republicans, in particular, now claimed to hate it.

Something similar is happening with immigration in Britain today. Ask about “immigration” in the abstract, and you will get the impression that the country is deeply divided on the subject, and that the majority is intensely hostile to it. But ask more specific questions, and you will get a very different picture. There are large groups of immigrants that are widely accepted, or even popular – including among people who express negative views about “immigration” in the abstract. Highly skilled migrants, foreign investors and entrepreneurs, immigrants from culturally similar countries and foreign students are particularly popular.

There is a common narrative that if you support a more liberal immigration policy, you are part of an out-of-touch metropolitan elite which sneers at ordinary folks. If you want to show how much you are in touch with “the people”, you need to signal your commitment to cutting immigration numbers.

But this is highly misleading. Yes, some types of immigration are unpopular, and you are not going to get popular support for a libertarian open-borders policy any time soon. But as I show in my new paper, Immigration: Picking the Low-Hanging Fruit, it would be perfectly feasible to liberalise our immigration system in some respects, without antagonising the public in the process. The paper does not outline an “ideal” immigration system. It outlines the most liberal immigration system that is just about compatible with public opinion.

More precisely, it outlines a two-lane immigration system, consisting of a standard lane and a fast lane.

The standard lane would use the current work visa system (the “Tier 2” system) as the starting point, but it would greatly simplify and tidy up that system. At the moment, Tier 2 applicants have to jump through all kinds of bureaucratic hoops in order to prove to the Home Office that they are the “right” kind of immigrant. Under my system, they would only need a job offer, a minimum salary (set slightly above the national average), and a clean criminal record. It would no longer be the Home Office’s job to assess whether a person brings the skills that “we” need. Who is “we”? If you can land a job at an above-average salary here, then by definition, there is at least somebody in Britain who values your skills highly enough. Otherwise, they would not have hired you. It’s as simple as that. That’s the market test, and that’s all it takes. I trust the market a lot more than any Home Office bureaucrat.

The fast lane would use unrestricted freedom of movement, of the kind that currently exists in the European Economic Area (EEA), as the starting point. The main difference to the current situation would be that free movement would be applied to a different set of countries.

Most commentators seem to see the Brexit vote as a rejection of the very concept of free movement. It wasn’t. Surveys show that there is, for example, overwhelming support for freedom of movement between the UK, Canada, Australia and New Zealand (“CANZUK”). One could probably add the US to that mix. As for Europe: free movement was never controversial in Britain until the EU’s eastward expansion in 2004 and 2007. Until then, even UKIP barely mentioned the subject. It was the quick and asymmetric opening of the borders to a number of substantially poorer countries which provoked resistance.

But this is not a reason for giving up on free movement altogether. It is, at best, an argument for returning to the pre-2004 status quo ante, in which free movement rights only apply to the old EU member states and the EFTA countries.

In short, there would be a “free movement zone” comprising developed Anglosphere countries and Western Europe. This free movement zone could eventually be expanded. A good rule of thumb would be that as soon as a country’s GDP per capita reaches 80 per cent of the UK level, its citizens should qualify for free movement rights.

Immigration between rich countries, even when completely uncontrolled, is heavily biased towards the highly skilled. There is nothing that could currently stop unskilled people from, say, Denmark or Switzerland from moving to the UK in large numbers, but in practice, this does not happen. Migration between rich countries delivers pretty much the same outcomes that a highly selective points-based system would also produce – except that it does so at zero administrative cost.

Finally, foreign students should be allowed to work alongside their studies for as many hours per week as they want, and they should have an automatic right to stay in Britain for a period of at least two years after graduation.

Such a system would be substantially more liberal than what the government is currently planning for the time after the Brexit transition period. Perhaps counterintuitively, it could also turn out to be more popular, or at least, not more unpopular. It would liberalise migration in selective ways, namely, in those areas where the public is most comfortable with it. This is how the words “popular” and “liberal” can indeed fit into the same sentence.

Dr Kristian Niemietz is the IEA's Head of Political Economy. He is also a Fellow of the Age Endeavour Fellowship.
Kristian studied Economics at the Humboldt Universität zu Berlin and the Universidad de Salamanca, graduating in 2007 as Diplom-Volkswirt (≈MSc in Economics). During his studies, he interned at the Central Bank of Bolivia (2004), the National Statistics Office of Paraguay (2005), and at the IEA (2006). In 2013, he completed a PhD in Political Economy at King’s College London. Kristian previously worked as a Research Fellow at the Berlin-based Institute for Free Enterprise (IUF), and at King's College London, where he taught Economics throughout his postgraduate studies. He is a regular contributor to various journals in the UK, Germany and Switzerland.

]]>https://iea.org.uk/it-is-perfectly-possible-to-liberalise-our-immigration-system-without-antagonising-the-public/feed/1All hail the Mayor of San Diego!https://iea.org.uk/all-hail-the-mayor-of-san-diego/
https://iea.org.uk/all-hail-the-mayor-of-san-diego/#respondThu, 17 Jan 2019 08:28:07 +0000https://iea.org.uk/?p=29736All hail the Mayor of San Diego! Earlier this week, Californian lawmaker Kevin Faulconer outlined an ambitious overhaul of the city’s planning system. He tweeted: “Government can’t build its way out of the housing crisis. We need to get government out of the way – so constructing homes becomes easier, less expensive and faster.” Faulconer and … Continue reading "All hail the Mayor of San Diego!"

“Government can’t build its way out of the housing crisis. We need to get government out of the way – so constructing homes becomes easier, less expensive and faster.”

Faulconer and his team propose removing height and density limits from the planning system, and promise to streamline development, allowing much-needed projects to be built without the usual reviews and permissions.

To free-marketeers following the UK housing debate, his arguments read like manna from heaven.

The Labour Party, unsurprisingly, tends to focus on government-built ‘affordable’ and Council housing, rather than taking a supply side view and considering the systemic obstacles to increasing housing stock overall.

The Conservatives, too, have long favoured inflationary demand-side policies like Help to Buy or else relatively slight and ineffective tweaks. In her Party Conference speech last year, the Prime Minister vowed to kick-start a council housing revolution by lifting a cap on local authorities’ borrowing. That is not to say that all of these are terrible ideas, but the statism and general lack of radical thinking does suggest that British politicians have lost faith in the market – and ‘Econ 101’ – to deliver housing.

“Teach a parrot to say ‘Supply and Demand’ and you’ve got yourself an economist”, in Thomas Carlyle’s (probably apocryphal) words. You certainly don’t need to be an economist to grasp that today, Carlyle’s parrot would be urging us to build more houses. But what would he have made of recent action on housing?

Polly might welcome increased housing stock of any kind. But if strictly wedded to the laws of supply and demand, she would probably prefer policies that enabled more and cheaper homes to be built in the long run, rather than measures dependent on government borrowing.

Since government-imposed legislation is largely responsible for the housing crisis in the first place, how ironic that many favour statist solutions. Britain’s onerous planning laws (the most restrictive in the OECD) not only protect rural land, preventing development in arbitrarily-defined ‘Green Belt’ areas, but make urban redevelopment costly and complex.

By demonising developers and propagating a view that “Right to Buy” has decimated Britain’s social housing stock, a new consensus has emerged, insisting “we cannot trust the private sector to deliver the housing we need – so the state must intervene.”

In reality, Britain has the third highest rate of social housing in Europe. On the continent, private sector house-building is very much the norm – as it once was here. In 1934-35, before Green Belt restrictions, the private sector built almost 300,000 houses a year, with a much smaller population.

As Kristian Niemietz has outlined, most common complaints about housing are driven by the same lack of supply. In the social sector, this means additional demand for state housing, the last chance saloon for tenants with no other option. In the private rental sector, the problem creates soaring rents and “rogue landlords”. Would-be homeowners struggle to access housing finance and raise capital for deposits.

For all the talk of social housing, there is arguably no specific shortage in any one area, but an overall lack of affordable housing across all tenures. To fix this, we don’t need separate policy measures for specific sub-sectors, but an overall increase in housing supply across the board.

Loosening planning restrictions is by far the easiest and cheapest way of achieving this. Yet rather than embrace the power of the market through planning liberalisation, politicians of all stripes have accepted a dirigiste narrative which requires house-building to be performed by government. The Mayor of San Diego’s recent pronouncements give us a taste of what has been sorely lacking in the debate.

State-sponsored housing may address supply in the short term, but anything which fails to reduce systemic obstacles to building will be less Carlyle’s parrot, more Dead Parrot.

Madeline is the IEA’s Editorial Manager, responsible for commissioning and running the IEA blog, and creating content for the IEA podcast channel and other media outlets. Prior to joining the Institute, she worked as a Parliamentary researcher and speechwriter, and as a reporter for Newsweek Magazine.
Madeline graduated from St Hilda’s College, Oxford in 2014, with a degree in English. As an undergraduate, Madeline was actively involved in university politics, and was elected to Standing Committee of the Oxford Union during her studies.

]]>https://iea.org.uk/all-hail-the-mayor-of-san-diego/feed/0Debate: Nudge economics – can paternalism ever be libertarian?https://iea.org.uk/debate-nudge-economics-can-paternalism-ever-be-libertarian/
https://iea.org.uk/debate-nudge-economics-can-paternalism-ever-be-libertarian/#commentsTue, 15 Jan 2019 10:23:19 +0000https://iea.org.uk/?p=29726We are living in a new era of ‘Nudge’. Over the past decade, a growing number of academics and policymakers have made the moral case for the state to use its coercive power to steer our choices towards what they believe best – provided we retain the ability to opt out of the specified choice … Continue reading "Debate: Nudge economics – can paternalism ever be libertarian?"

]]>We are living in a new era of ‘Nudge’. Over the past decade, a growing number of academics and policymakers have made the moral case for the state to use its coercive power to steer our choices towards what they believe best – provided we retain the ability to opt out of the specified choice at a relatively low cost.

Yet are these sensible ideas, likely to maximise wealth and wellbeing, or is there always the danger that gentle nudges will turn into intrusive diktats or embolden the Nanny State? Can paternalism ever be libertarian?

YES, says Julian Jessop, an independent economist and member of the IEA’s Academic Advisory Council

At first sight there’s an obvious inconsistency between libertarianism and paternalism, as the latter usually involves actions which limit someone’s choices even if the intention is to promote their own good. How can it be right to limit an individual’s freedom and autonomy just because the government thinks it knows better?

Indeed, some of the arguments used to justify state intervention are pretty flimsy. One of the most common is the need to address some form of externality – the cost to the NHS of smoking or obesity, for example. As it happens, that’s not actually a paternalist point, since the aim is to protect the interests of the general public rather than the smoker or over-eater themselves. But the measures proposed, such as punitive ‘sin taxes’ or outright bans, usually go far further than those that could possibly be justified on the basis of any harm to others. If someone decides they would be happier with an unhealthy diet or riskier lifestyle, who am I to stop them? (Here I recommend the critique of ‘public health paternalism’ in Chris Snowdon’s excellent book, Killjoys.)

Nonetheless, there are areas where exceptions can be excused. In particular, even John Stuart Mill (On Liberty) allowed for the possibility that paternalism could be justified in the case of children. Would we really be happy to allow an 8-year old complete freedom to buy alcohol or fireworks? Here at least there is some basis for the presumption that the individual is not always the right person to decide what is in their own best interests. Ideally any intervention might be left to parents or guardians, but it doesn’t seem unreasonable for the state to act as backstop.

Nudge economics provides further examples. As explained by Thaler and Sunstein, “A nudge, as we will use the term, is any aspect of the choice architecture that alters people’s behaviour in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting fruit at eye level counts as a nudge. Banning junk food does not.”

This approach can be seen as a form of ‘libertarian paternalism’. Admittedly, many of most commonly cited examples are not entirely ‘paternalistic’. The image of a housefly painted in men’s urinals (to improve their aim!) mainly benefits those tasked with cleaning up afterwards. Changing the default option for organ donation so that potential donors are automatically ‘opted in’ mainly benefits the recipients. But the wayward gentleman is also helped by having a target to hit, while people who would be happy to donate their organs might appreciate it being easier to do so.

What about more coercive measures? A good example here is the compulsory wearing of seatbelts. A purist could say that people should be free to be reckless and that banning one type of risky activity might be a slippery slope towards more interventions elsewhere. But I’d be more pragmatic. The rules on seatbelts have undoubtedly saved lives. I would be surprised if many people who have benefited from wearing them then say they wish the rules hadn’t been in place. However, it is also crucial that any intervention is properly evidence-based. It’s not clear, for instance, that requiring cyclists to wear helmets would be proportionate, or even helpful.

In short, a little light paternalism can, sometimes, be libertarian. But this should not be a green light for celebrity campaigners and health puritans to tell the rest of us what to do.

NO, says the IEA’s Chief Operating Officer Andy Mayer

Two key benefits of using behavioural nudges to improve wellbeing, in theory at least, are retaining individual choice and avoiding more coercive forms of regulation. For example, rather than outright bans on smoking, most governments prefer sin taxes, in the form of excise duties, to reduce consumption by pricing in the harm of the activity.

Most libertarians, whether they smoke or not, would regard the evident risk of self harm as being your choice, not the government’s business. They might accept that in a socialised healthcare environment, there is a case for using taxes to offset the cost of treatment. Yet they would not regard current tobacco taxes as proportionate to these costs – British smokers already subsidise non-smokers heavily. Accommodating sin taxes certainly hasn’t prevented more authoritarian restrictions alongside them, like plain packaging or restrictions on advertising and retail.

Governments have a habit of choosing the wrong issues. Some, like tobacco, are easy targets, because of the unambiguous harm caused by traditional smoking. Children shouldn’t smoke at all, and as a minority leisure pursuit it is easy to make the case for smoke-free environs over the alternative (forcing non-smokers to inhale if they wish to be sociable). Most targets for nudge-interventions are not so easy to justify.

Take plastic bags. 40 years ago we were mostly concerned with children wearing them and suffocating – today litter and marine pollution dominate the debate. Yet plastic bags are unambiguously useful. The environmental case against them is nuanced – for example, bags are not the major source of even plastic pollution and their use reduces food waste. They are many times lighter than alternative materials like hemp, which reduces the CO2 footprint of transporting them, and they can be made using biodegradable alternatives that don’t endanger photogenic fish.

In seeking to reduce their use through sin taxes, retailers have switched to ‘bags for life’ that use more plastic but are rarely used as intended, triggering calls for higher taxes, and even more heavy handed interventions. Such nudges seem more like ‘woke’ virtue signalling than attempts to promote better solutions.

Likewise, although intended to lower consumers’ energy bills and encourage them to switch to better value providers or purchase more energy efficient products, the ‘smart meter’ revolution has been patchy. Over the last few years the government has introduced legislation covering targets and supplier incentives – and now micromanages everything from the design of meters to use of consumer data. What would today be a simple technology based on a chip in a meter communicating with your phone, is instead compelled to be an already redundant box linked to meters which don’t work with other providers. By intervening, the government has hindered smart home markets, rather than encouraging them.

Meat is another recent obsession. Many believe eating less meat would be better for us and the planet – though this is contested. Some politicians have called for a meat tax, much like contemporary reasoning on tobacco and carbon.

Personally I do not want the government to be interfering with sheep. They already intervene extensively in the supply side of agriculture, with subsidies, regulations and other measures. Simultaneously nudging demand is likely to have a host of unintended consequences, e.g. paying people to graze animals we then don’t want other people to buy. It is surely better to let these matters rest with individuals, deciding for themselves whether they find veganism compelling – or would prefer a burger with extra bacon.

In a choice between bad government interventions or terrible ones, we should prefer libertarian paternalism to authoritarian diktat. We should perhaps be ‘nudging’ governments intent on making moral choices for us in that direction. Yet nudge infrastructure is merely a basket of tools – only as good as those who employ it – and its recent history is littered with examples of harmful unintended consequences.

In a free society, genuinely libertarian inspiration should lead by example – not rigged choices.

Julian Jessop is an independent economist with over thirty years of experience gained in the public sector, City and consultancy, including senior positions at HM Treasury, HSBC, Standard Chartered Bank and Capital Economics. He was Chief Economist and Head of the Brexit Unit at the IEA until December 2018 and continues to support our work, especially schools outreach, on a pro bono basis.

Andy Mayer

Andy Mayer is Chief Operating Officer at the IEA. Andy worked as Head of Public Affairs, UK & Ireland at BASF plc for seven years. He has over 20 years of experience in strategic communications and the operations that support them in the business and think tank worlds.